Investment is an act of capital deposit which can be in the form of fund or other assets with the aim to grow the value of the capital and earn profit for investors within a certain period. The potential profit is higher compared to regular savings. In addition, investing can protect the value of asset capital from inflation, which leads to the decrease in the purchasing power of the fund.
With the attractive return potential, investment is gaining popularity. However, investors need to be careful in investing considering the principle of high risk, high return, which means higher potential profit cannot be separated from the risks or consequences ahead. Therefore, it is important for prospective investors to understand the suitable type of investment product.
Naturally all investors aim for investment with high returns but low risk. But is there such type of investment? Check out the explanation below.
Mutual Fund Investment: Definition, Types, and How Mutual Fund Investment Works
Mutual Fund investment is a way of investing in the capital market through the purchase of a mutual fund product. In Mutual Fund investment, funds from investors will be collected by the Investment Manager and then invested in stocks, bonds, and money market instruments. To invest, investors simply buy an 'investment package' or mutual fund provided by the Investment Manager. That way, mutual fund investment becomes less risky, suitable for investors who don't have the time and the experience of investing in the capital market. Moreover, Mutual Funds are considered safe as they are registered and supervised by the Financial Services Authority (OJK).
In addition, Mutual Fund investment is a relatively low risk investment. However, investors need to know that there are four types of Mutual Funds, namely Money Market Funds, Fixed Income Funds, Balanced Funds, and Equity Funds. Of the four types of Mutual Funds, Money Market Mutual Funds have minimal risk and can be suitable for even novice investors. This type of mutual fund investment is also popular because it matures in less than one year.
Money Market Fund Investment
In Money Market Funds, investors invest their fund in money market instruments which can be in the form of securities such as bonds, Bank Indonesia Certificates (SBI), or fixed deposits with maturities of less than one year. Considering the principle of high risk, high return investment, Money Market Funds investment have the potential to generate a return of 5-6%, not as high as other mutual funds, namely 7-10% for Fixed Income Funds, 11-16% for Balanced Funds, and 17-20% for Equity Funds.
After knowing the investment objectives and choosing the type of Mutual Funds, it is important for investors to understand their financial capabilities or personal financial condition. This understanding is a strong base to determine the next steps forward. For example, for an education fund plan, it is highly recommended to take a non-aggressive and conservative mutual fund, such as a money market fund. For definite investment purposes such as education, of course you want to invest with minimal risk.
It is important for investors to remember that there is no guarantee that the amount of investment return will be achieved within a certain period. There is a possibility of loss which depends on the portfolio you have and market conditions. For this reason, investors must be careful in taking investment steps such as reviewing your investment profile and adjusting it to your goals, needs, and financial capabilities. If your portfolio is growing very well and you are willing to take risks, you can consider investing in a type of mutual funds with a higher return.
Mutual Funds Investment with DBS Treasures
DBS Treasures is a priority banking from Bank DBS Indonesia which is intended for clients with a minimum fund placement of IDR 500,000,000, offering Intuitive Wealth Management to Empower Confident Decisions in optimal, precise, and accurate investment decisions. There are three main focuses which include being proactive with the latest opportunities and insights, a collaboration between a team of financial experts in analysing market data and client risk profiles, as well as continuous digital innovation to enable investment transactions from anywhere and anytime.
1. Proactive with the latest insightsDBS Treasures proactively provides updated insights for priority clients. Clients will receive an analysis of market opportunities and developments through Daily Update, Monthly Market Update, and eTalk series webinars. Therefore clients can quickly seize opportunities to strengthen their portfolios through a variety of financial products.
2. Collaboration of financial experts powered by data
Clients will be supported by a team of financial experts consisting of Market Intelligence, Data Scientist, Product Specialist, and certified Relationship Manager. This team collaborates in analysing up-to-date market data and client risk profiles to optimise the wealth management strategies.
3. Continuous digital innovation
DBS Treasures continues to innovate in seamless investment transactions, including 24/7 investment through the digibank by DBS Application, communicating the latest opportunities and market analysis results through the client’s preferred media, such as SMS, WhatsApp, email, to video calls.
Investments in Money Market Funds are in great demand by investors for planning education funds and retirement funds. With DBS Treasures, you no longer need to worry about the right investment plan and strategy. Bring your future aspirations to life confidently with a team of financial experts who are proactive in presenting opportunities, collaborate to analyse data, as well as a variety of continuous digital innovations.
